Where America Stands: Credit Cards Video

Where America Stands: Credit Cards Video Transcript

< NARR:THEY'VE BECOME A CORNERSTONE OF THE U.S. ECONOMY: ULZHEIMER: "More credit cards are issued in this country than another country." (17:42) NARR: NEARLY 700 (686) MILLION. MORE THAN TWO CARDS FOR EVERY AMERICAN.: ONDINE IRVING: "The American consumer has basically been living on inflated income for the past 10 years." (12:08:03) [TAKE: EDIT 2/ SLATE NAME: REPORT CARD] [TAKE: BALANCE GFX -- COMPLETED] THE REPORT CARD IS WRITTEN IN RED INK. BORROWERS HAVE AN OUSTANDING CREDIT CARD BALANCE OF 775 BILLION DOLLARS: DANN ADAMS: "We have a lot of people playing catch up." NARR: NOW, THE IMPACT OF THE GREAT RECESSION ...AND SWEEPING NEW REGULATIONS PASSED BY CONGRESS TO PROTECT CONSUMERS... [TAKE: EDIT 2 / SLATE NAME: THE PROBLEM] ..HAVE CREATED NEW PROBLEMS THAT ARE RADICALLY ALTERING OUR RELATIONSHIP WITH THE TWO INCH PIECE OF PLASTIC THAT POWERS SO MUCH OF THE US ECONOMY: . MASON: "Has the game changed?" (04:19) ULZHEIMER: "The game has changed entirely." NARR: JOHN ULZHEIMER OF CREDIT.COM SAYS THE NEW CREDIT CARDHOLDERS BILL OF RIGHTS, WHICH TAKES EFFECT TODAY... [TAKE: GFX DONE --- EDIT 2 / CREDIT CARD ACT DOCUMENT NAME: New Rules: 21 Day grace period // 45 day notice before rate hike // Bans Automatic Credit Limit Fees] - GIVES BORROWERS A 21 DAY GRACE PERIOD TO MAKE PAYMENTS - REQUIRES A LENDER TO GIVE 45 DAYS NOTICE BEFORE RAISING YOUR INTEREST RATE... - AND ABOLISHES FEES FOR GOING OVER YOUR CREDIT LIMIT: MASON: "Are these rules likely to cost them money?" (02:06) ULZHEIMER: "The Over the Limit fee restriction will likely cost the credit card industry between 10 and 15 billion dollars." [Notes:GFX DONE --] ON CAMERA (with graphic): BANKS HAVE ALREADY STARTED TRYING TO MAKE UP SOME OF THAT LOST REVENUE BY HIKING OTHER FEES AND INTEREST RATES. IN A NEW CBS NEWS POLL, NEARLY 40% OF BORROWERS SAY THEIR RATE HAS GONE UP IN THE PAST FEW MONTHS. THE AVERAGE ADVERTISED RATE FOR CREDIT CARDS A YEAR AGO WAS 11.5%. TODAY IT'S 13.5%, (duncan) "we'll ship these out next week" NARR: DAVID DUNCAN USED HIS CREDIT CARDS TO HELP LAUNCH HIS GEORGIA BASED CANDLE AND FRAGRANCE COMPANY, PADDYWAX...BUT LAST YEAR HE GOT A NOTICE FROM HIS BANK: MASON: "They cut your limit in half?" DUNCAN: "They cut the limit in half." MASON: "And did what to your interest rates?" PADDY: "I went from 8% to 24%." (3:40:42) NARR: SO DUNCAN HAS PAID OFF HIS CREDIT CARDS COMPLETLEY: DUNCAN: "I've changed my habits." (40:10) NARR: HE'S NOT ALONE. ADAMS: "And we're seeing some unbelievable trends that frankly we haven't seen before." (2:03:22) NARR: DANN ADAMS OF EQUIFAX, THE ATLANTA COMPANY THAT MANAGES 230 MILLION CREDIT FILES SAYS AMERICANS [TAKE: SMOKE SWIPPER GFX // $71.2 Billion // 8.4%] HAVE LOWERED THEIR CREDIT CARD DEBT BY MORE THAN 8% (8.4%) THIS PAST YEAR. (GFX OUT) AT THE SAME TIME, BANKS HAVE CUT BACK ON CREDIT CARD OFFERS AS DELINQUENCY RATES HAVE SOARED DURING THE RECESSION: ADAMS: "So what we've seen is a 43% drop in the number of new account openings for credit cards over the past 12 months." (09:30) NARR: THE TRUTH IS OUR BRAINS MAY BE HARD WIRED TO BUY IMPULSIVELY: MASON: "What exactly is a neuro-economist?" (3:28:05) BERNS: "i'm a neuro-economist." NARR: FOR THE PAST DECADE, DR. GREGORY BERNS OF EMORY UNIVERISTY HAS BEEN USING BRAIN SCANS TO STUDY HOW WE MAKE BUYING DECISIONS. IT'S A FIGHT HE SAYS BETWEEN THE DOPAMINE NEUROTRANSMITTERS IN THE CENTER OF THE BRAIN... BERNS: "And those are the signals that carry the immediate prospect of reward." (3:21:50) NARR: ...AND THE FRONTAL LOBES WHICH DEAL WITH THE FUTURE BERNS: "in fact, when you're doing the brain imaging experiments, you often see//kind of a battle being waged between these short term rewards systems and these longer term planning systems." (02:48) NARR: BERNS SAYS OUR BRAINS ARE BETTER AT PROCESSING THE PRESENT BERNS: "And the degree to which that happens effects our balance sheets when we're pulling out the card and making that decision." (07:35)) [TAKE: EDIT 2 // SLATE NAME: SOLUTIONS] NARR: ANALYSTS SEE TWO POSSIBLE SOLUTIONS TO OUR CREDIT CARD PROBLEM: FIRST, THE U.S. COULD MOVE TO [TAKE: CR 34 // LOWER THIRD TAB NAME: Solution One: European Model] MORE OF A CASH BASED SYSTEM, LIKE THE EUROPEAN MODEL, WHERE SHOPPERS RELY ON DEBIT CARDS, THAT DRAW DIRECTLY FROM THEIR BANK ACCOUNTS. [TAKE: CR 34 // YUMA: Debit vs Credit NAME: Germany: 91 Million Debit Cards...4 Million Credit Cards// France: 78 Million Debit Cards...34 Million Credit Cards] GERMANY HAS ONLY 4 MILLION CREDIT CARDS. IN FRANCE DEBIT CARDS OUTNUMBER CREDIT CARDS BY MORE THAN TWO TO ONE: FRENCH GUY: "It forces me to know how much money I have and how much money I can spend instead of thinking - whatever, I'll pay next month." (13:20:10) [TAKE: CR 34 // LOWER THIRD TAB NAME: Solution: Card Competition] NARR: SECOND, WE NEED GREATER COMPETITION. [TAKE: CR34 // ATM JPEG PUSH TO BANK LOGOS NAME: Bank of America, JP Morgan Chase, Citigroup, American Express, Capital One, Discover, Wells Fargo, HSBC, U.S. Bank, USAA Savings] TODAY JUST TEN COMPANIES CONTROL 90% OF THE CREDIT CARD MARKET. (GFX OUT) BUT MUCH SMALLER CREDIT UNIONS OFTEN OFFER MUCH BETTER DEALS....LIKE FIRST COMMUNITY IN KALAMAZOO, MICHIGAN. SIX YEARS AGO, THIS CREDIT UNION SOLD ITS CREDIT CARD PROGRAM TO A BANK... ONDINE IRVING (in car): "The members got upset. The rates were escalating..." (12:18:27) NARR: AFTER THE BACKLASH, CARD CONSULTANT ONDINE IRVING WAS CALLED IN TO HELP "FIRST COMMUNITY" REBUILD THE CARD PROGRAM. [TAKE: GFX DONE -- EDIT 2 // Bank Rate: 12-29% // Credit Union Starter Rate: 8.25% // Credit Union Highest Rate: 18%] WHILE THE BANK CHARGED RATES OF 12 TO 29%. THE CREDIT UNION NOW OFFERS A STARTER RATE OF 8.25%.. AND CAPPED ITS HIGHEST RATE AT 18%. (GFX OUT) IT'S ALSO ELIMINATED BALANCE TRANSFER AND ANNUAL FEES: ONDINE: "Credit Unions can eliminate all that and still make a profit. And if credit unions can do it, the banks should be able to as well. They are just choosing not to." (11:58:20) NARR: THE RECESSION HAS FORCED MANY AMERICANS TO CONFRONT A CREDIT CARD ADDICTION. AMERICA'S RELATIONSHIP WITH PLASTIC HAS TO CHANGE. WE CAN'T AFFORD FOR IT NOT TO. ANTHONY MASON, CBS NEWS, ATLANTA. +++++++++++++++++++++++++++++++++++++++++++ KATIE BUTTON: A post script. CBS News asked the 5 biggest credit card issuers for interviews for this story. All 5 either turned us down our did not respond to our requests.